Optimal Dynamic Pricing of Perishable Products Considering Quantity Discount Policy ?

The perishable product’s dynamic pricing with quantity discount strategy is studied. The seller uses two-period dynamic price during the whole sale period and introduces quantity discount in second sale period in order to improve the seller’s profit. The mathematic model expressions are obtained by assuming that consumer’s reservation price draws from a uniform distribution and the price discount is the linear function of the consumer’s proportion that purchased two units product in the second period. The models provide insights about optimal price and price discount under different levels of the number of the potential consumers, salvage value, reservation price. Finally, Matlab is used to implement the numerical studies and sensitivity tests. We find that the seller’s profit increases effectively after using quantity discount strategy through raising the two-period price and lowering the remaining inventory. The effectiveness of the quantity discount depends heavily on the number of potential consumers, the product’s salvage value, the difference between highest and lowest reservation price.